Acacia Research Corporation (ACTG): Business Model Canvas [Dec-2025 Updated]

You're not looking at a typical operating company; Acacia Research Corporation (ACTG) is a permanent capital machine, and understanding their model is key to valuing them. They don't just sell a product; they buy, fix, and sell entire companies or assets, using patient, long-term money to unlock hidden value. With a war chest targeting over $250 million for deployment in 2025, their game is strategic acquisition and operational turnaround, plus the steady revenue stream from their intellectual property portfolio. It's a complex, defintely high-risk, high-reward structure that requires a deep dive into their capital allocation strategy, so let's break down the nine building blocks of their Business Model Canvas.

Acacia Research Corporation (ACTG) - Canvas Business Model: Key Partnerships

Acacia Research Corporation's (ACTG) business model hinges on a 'permanent capital' approach to acquiring and operating undervalued businesses, and that strategy is completely dependent on a tight network of key partnerships. The most critical partnership is with its controlling shareholder, Starboard Value LP, which provides both the capital base and the strategic roadmap.

The firm's partnerships are not just for capital; they are for deal flow, operational expertise, and specialized enforcement. This model allowed Acacia to report total revenue of $59.4 million in the third quarter of 2025, a 155% increase year-over-year, largely driven by its industrial and energy operating segments, which are managed via these partnerships. You need to see these partners as extensions of the core team.

Strategic Co-investors for Large-Scale Acquisitions

The foundation of Acacia's capital platform is its strategic partnership with activist investor Starboard Value LP. Starboard is not a passive investor; they are the controlling shareholder and an active strategic advisor, providing investment advice and due diligence services on a non-discretionary basis.

This relationship provides access to a significant capital pool, originally structured to provide up to $400 million for strategic investments and acquisitions. This capital flexibility is what allows Acacia to be an 'advantaged buyer' in off-the-run, complex transactions. For instance, the acquisition of Deflecto in late 2024 for $103.7 million demonstrated the deployment of this capital base in the industrial sector.

Public and Private Equity Firms for Deal Sourcing and Capital

Acacia actively seeks co-investment partners to share risk and leverage specialized industry knowledge for its operating segments. This is where the model moves beyond Starboard and gets defintely interesting.

• Starboard Value LP: Serves as the primary capital partner, providing a permanent capital base and strategic advisory services.
• McArron Partners: A key co-investor and operating partner in the Energy Operations segment, Benchmark Energy II. This partnership was instrumental in the acquisition of approximately 470 producing wells in the Western Anadarko Basin in 2024.
• Unchained Capital and Build Asset Management: A new partnership announced in August 2025 to purchase commercial whole loans collateralized by Bitcoin. This move diversifies Acacia's capital deployment into a high-yield, alternative asset class, with Unchained originating the loans and Build providing administrative services.

Investment Banks for M&A Advisory and Financing

While the internal team, including CEO Martin McNulty, Jr., who was previously a Managing Director at Starboard Value, drives much of the M&A, external firms provide crucial transaction support, deal sourcing, and financing. The goal here is to secure non-recourse debt and specialized advisory.

For the Benchmark Energy II acquisition, for example, the deal was funded using cash from the existing owners (Acacia and McArron Partners) plus committed debt financing from Texas-based regional banks. This is a common structure to keep debt non-recourse at the subsidiary level. For deal sourcing, the company has historically utilized finder relationships, such as the one with Brean Murray & Co., Inc.. This is how you get proprietary deal flow outside of a typical auction.

Operating Partners Who Manage Acquired Portfolio Companies

Acacia operates as a holding company, so the actual value creation happens through the management teams of its subsidiaries. These teams are, in effect, the operating partners who execute the post-acquisition improvements.

The partnership with McArron Partners is a hybrid example, as they are both co-investor and an operational resource in the energy space, leveraging their deep experience in oil and gas. For the Benchmark Energy II segment, this operational expertise is key to driving the value in the acquired assets, which have a total proved developed reserves as of year-end 2024. The total consolidated indebtedness was $94.0 million in non-recourse debt at the Benchmark and Deflecto subsidiaries as of September 30, 2025, which shows the capital structure reliance on these operating entities.

Legal and Technical Experts for Intellectual Property (IP) Enforcement

The Intellectual Property Operations segment, Acacia Research Group, LLC (ARG), relies on a network of external patent owners and specialized legal counsel to execute its monetization strategy. This is a pure-play partnership model.

Acacia partners with patent owners-ranging from individual inventors and universities to large corporations-to acquire or license patent portfolios. ARG assumes all operational expenses for the licensing and enforcement programs, sharing net licensing revenue with the patent partners on a pre-arranged basis. Since its inception, Acacia has signed more than 1200 licensing agreements and returned over $727,000,000 to its patent partners. The IP segment generated $7.8 million in licensing and other revenue in Q3 2025.

The table below summarizes the core partnerships and their function in the 2025 business model:

Partner Entity	Role/Function	Segment Impacted	Key Metric/Value (2025)
Starboard Value LP	Strategic Co-investor, Controlling Shareholder, Strategic Advisory	Holding Company (All Segments)	Access to up to $400 million in capital for acquisitions.
McArron Partners	Co-investor and Operating Partner	Energy Operations (Benchmark Energy II)	Co-funded the acquisition of 470 producing wells in the Western Anadarko Basin.
Unchained Capital & Build Asset Management	Financing/Capital Deployment Partner	Alternative Investments / Loans Receivable	Partnership for Bitcoin-Backed Commercial Loan Strategy (announced August 2025).
Patent Owners/Inventors	IP Portfolio Source/Revenue Share Partner	Intellectual Property Operations (ARG)	Over $727,000,000 returned to partners historically; Q3 2025 IP Revenue of $7.8 million.
Texas-based Regional Banks	Committed Debt Financing Provider	Industrial and Energy Operations	Part of the $94.0 million in consolidated non-recourse debt at subsidiaries (Q3 2025).

Acacia Research Corporation (ACTG) - Canvas Business Model: Key Activities

Identifying and executing strategic acquisitions

Acacia Research Corporation's core activity is finding and buying businesses-it's an acquisition platform, not just a holding company. You are looking for value-oriented opportunities in complex situations, specifically targeting the industrial, energy, and technology sectors. This isn't a quick flip strategy; it's about acquiring underappreciated assets with strong underlying cash flow potential.

For example, the Manufacturing Operations segment, which includes Deflecto, was acquired in late 2024 and has already become a major revenue driver, generating $30.8 million in revenue in the third quarter of 2025 alone. The Energy Operations segment, Benchmark, is another key platform, and the company continues to evaluate comparable opportunities within its existing geographies, though they are cautious about rising valuations in the Western Anadarko Basin.

Active management and optimization of portfolio companies

Once an asset is acquired, the work shifts to operational improvement. We're not passive investors; we roll up our sleeves. This involves implementing pricing strategies, driving cost savings initiatives, and improving operational efficiencies, like the plant consolidations mentioned by management.

Here's the quick math on debt reduction: Since acquiring the Revolution assets in Q2 2024, Benchmark has paid down approximately $24 million in total debt. Plus, since the Deflecto acquisition in October 2024, the company has paid down roughly $13 million in total debt. This active management reduces interest expense and boosts operational flexibility, which is defintely a key activity.

• Implement pricing strategies to mitigate tariff pressures.
• Execute cost savings initiatives across all segments.
• Drive operational efficiencies and plant consolidations.
• Reduce subsidiary-level debt to enhance free cash flow.

Monetizing intellectual property (IP) assets and licensing

This activity is the most episodic, meaning the revenue comes in big, unpredictable chunks. The Intellectual Property Operations segment focuses on investing in, licensing, and enforcing patented technologies. It's a high-margin, high-volatility business.

To be fair, the quarterly fluctuations are huge, but the payoff can be significant. For instance, the IP segment generated a massive $69.9 million in license fee revenue in Q1 2025, largely driven by the WiFi-6 portfolio. But that's not a steady stream; in Q2 2025, IP revenue dropped sharply to just $0.3 million, before recovering somewhat to $7.8 million in Q3 2025. This segment requires specialized legal and technical expertise to execute complex settlements.

Capital allocation and risk management across diverse assets

The strategic deployment of capital is perhaps the most crucial activity. Acacia Research Corporation operates with a strong balance sheet, which gives it the flexibility to act when others can't. This is where the two decades of experience really come into play-disciplined capital allocation in uncertain markets.

As of September 30, 2025, the company had a robust cash, cash equivalents, and equity securities position of $332.4 million. What this estimate hides is that the parent company itself has zero total indebtedness, though consolidated total indebtedness (non-recourse debt at subsidiaries like Benchmark and Deflecto) was $94.0 million. This structure manages risk by isolating the debt at the operating company level.

Here is a breakdown of the 2025 segment revenues, showing the diversity of the asset base:

Segment	Q1 2025 Revenue	Q2 2025 Revenue	Q3 2025 Revenue
Intellectual Property Operations	$69.9 million	$0.3 million	$7.8 million
Manufacturing Operations (Deflecto)	$28.5 million	$29.0 million	$30.8 million
Energy Operations (Benchmark)	$18.3 million	$15.3 million	$14.2 million
Industrial Operations (Printronix)	N/A	$6.6 million	$6.7 million

Securing long-term, patient capital for future deals

To fuel its acquisition engine, the company needs patient capital. The strategic relationship with Starboard Value, a major investment adviser, is a key activity here, expanding Acacia Research Corporation's sourcing capability and resources. This relationship helps secure the long-term capital needed to pursue accretive investment opportunities as they arise.

The goal is to maintain significant dry powder. The $332.4 million in cash and investments as of Q3 2025 is the war chest for future deals. They are actively seeking new platforms to allocate capital, like the ongoing evaluation of comparable opportunities in the oil and gas industry for the Benchmark platform, or new acquisitions in the industrial and technology sectors.

Acacia Research Corporation (ACTG) - Canvas Business Model: Key Resources

You're looking at Acacia Research Corporation (ACTG) as a holding company, so its key resources aren't just factories or equipment; they are primarily financial and intellectual assets, plus the team that puts them to work. The most critical resource is its substantial pool of liquid capital, which stood at over $332 million as of the third quarter of 2025, ready for deployment.

This capital base, combined with a seasoned M&A team, is the engine for its entire strategy: acquiring and operating undervalued businesses across the industrial, energy, and technology sectors. Honestly, without this financial firepower, the whole model falls apart.

Substantial permanent capital base for long-term investing

Acacia's primary resource is its permanent capital base, which is explicitly designed to support long-term, opportunistic acquisitions without a fixed investment horizon. This is a huge advantage over traditional private equity, which has a fund life limit. The backing of Starboard Value, LP, its controlling shareholder, is a key part of this structure, providing stability and strategic alignment.

As of September 30, 2025, the company's book value was approximately $577.5 million, or $5.98 per share, demonstrating a strong equity foundation. The balance sheet is robust, with management emphasizing that there is no parent-level debt to service, which keeps the focus on accretive M&A and operational improvements within the portfolio companies.

Available cash and equivalents, targeting over $250 million for deployment

The company maintains a significant war chest for new acquisitions. This liquid capital is the fuel for their growth strategy. Here's the quick math on their deployment capacity:

Financial Metric (Q3 2025)	Amount (in millions USD)	Significance
Cash, Equity Securities, & Loans Receivable	$332.4 million	Total liquid capital for acquisitions and growth.
Book Value (June 30, 2025)	$577.5 million	Core equity value underpinning the capital base.
Target for Deployment	Over $250 million	Stated minimum available capital for M&A.

Holding $332.4 million in cash and equivalents gives them substantial dry powder to pursue accretive opportunities, especially in a volatile market where assets might become available at attractive prices. They are defintely positioned to act fast.

Experienced management team with M&A expertise

The human capital is centered on a management team with a deep background in M&A, operations, and value investing. The CEO, MJ McNulty, for instance, previously served as a Managing Director at Starboard Value, LP, which speaks directly to their activist and value-oriented transaction expertise. This experience is crucial for identifying undervalued targets and then driving operational efficiency post-acquisition.

The core leadership team, as of late 2025, includes:

• MJ McNulty (Chief Executive Officer)
• Michael Zambito (Chief Financial Officer)
• Robert Rasamny (Chief Administrative Officer)

This team is structured to execute their three core principles: people, process, and performance, which is exactly what you need when you're buying and fixing businesses.

Portfolio of acquired operating companies and assets

Acacia's portfolio of acquired companies is a key resource because it provides diversified, stable cash flow that helps fund the parent company's operations and future acquisitions. It operates across three distinct verticals, which mitigates single-sector risk.

The current portfolio includes:

• Benchmark Energy II: A 73.5% stake in an oil and gas production company, including assets in the Western Anadarko Basin. Energy operations generated $14.2 million in revenue in Q3 2025.
• Deflecto: A manufacturer of specialty equipment for commercial transportation, HVAC, and office markets. This business contributed $29.0 million in revenue in Q2 2025 and $30.8 million in Q3 2025, showing sequential growth.
• Printronix: A manufacturer of industrial impact printers.

Significant intellectual property (IP) portfolio and patents

The Intellectual Property Operations, run through its wholly owned subsidiary, Acacia Research Group LLC (ARG), remains a valuable, though lumpy, asset. This portfolio consists of multiple patent portfolios covering a range of technologies, which are monetized through licensing and enforcement actions.

While IP revenue can fluctuate based on settlements, the long-term value is clear: the IP operations generated approximately $107.7 million in EBITDA over the two years leading up to Q1 2025. This segment contributed $7.8 million in revenue in Q3 2025, driven by settlements and licenses.

Acacia Research Corporation (ACTG) - Canvas Business Model: Value Propositions

The core value proposition of Acacia Research Corporation isn't just buying companies; it's providing patient, permanent capital and deep operational know-how to fundamentally improve undervalued businesses across the industrial, energy, and technology sectors. You get a partner that is focused on long-term cash flow and intrinsic value, not a quick, forced exit.

Patient, strategic capital for undervalued assets

Acacia Research Corporation acts as a permanent capital vehicle, which is a major differentiator from traditional private equity (PE). This means we can hold assets for as long as it takes to realize their full value, without the pressure of a typical three-to-five-year fund life. Our financial strength allows us to be patient and strategic in our acquisitions.

Here's the quick math on our capital position as of September 30, 2025:

• Total Cash, Equity Securities, and Loans Receivable: approximately $332.4 million.
• Corporate Debt: $0.0.
• Book Value Per Share: $5.98.

This substantial liquidity, combined with zero corporate debt, gives us the dry powder to move quickly on opportunistic, value-oriented acquisitions, especially when market uncertainty is high.

Operational expertise to unlock hidden value in acquisitions

We don't just write a check; we embed operational expertise based on our three core principles: people, process, and performance. This is how we drive value and cash flow immediately post-acquisition. For instance, we focus on initiatives like strategic pricing, cost savings, and supply chain optimization.

Look at the results from our operated segments in Q3 2025:

• Benchmark Energy II is generating a roughly high teens free cash flow yield.
• Printronix is also delivering high teens yields.
• At Deflecto, we reduced General and Administrative (G&A) expense to $4.6 million in Q3 2025, down from $5.1 million in the prior quarter.

That G&A reduction alone shows a clear, immediate impact from streamlining operations.

Access to a diversified portfolio of businesses and IP

Your investment is instantly diversified across a portfolio of businesses in essential, stable sectors-Industrial, Energy, and Technology-plus our Intellectual Property (IP) operations, which can generate large, non-correlated cash settlements. This diversification provides stability and multiple avenues for value creation.

The segment revenue breakdown for Q3 2025 illustrates this mix:

Operating Segment	Q3 2025 Revenue	Q3 2025 Adjusted EBITDA (Operated Segment)
Manufacturing Operations (e.g., Deflecto)	$30.8 million	Included in total $12.6 million
Energy Operations (e.g., Benchmark Energy II)	$14.2 million	Included in total $12.6 million
Intellectual Property Operations	$7.8 million	Not explicitly broken out in Q3 2025 Adjusted EBITDA
Industrial Operations (e.g., Printronix)	$6.7 million	Included in total $12.6 million
Total Company Revenue	$59.4 million	$8.0 million (Total Company Adjusted EBITDA)

Liquidity and financial backing for turnaround situations

We provide the financial stability and capital structure necessary for businesses facing a transition or turnaround. Our balance sheet acts as a backstop, allowing management teams to focus on operational improvements rather than constant refinancing or liquidity concerns.

For example, the Benchmark Energy II subsidiary has paid down approximately $24 million in total non-recourse debt since its acquisition, underscoring the strong free cash flow generation that our backing enables. This ability to quickly de-lever is a direct benefit of our financial structure and strategic management.

Long-term focus, unlike traditional private equity funds

The most critical value proposition is our permanent capital base, which allows us to evaluate opportunities based on the attractiveness of underlying cash flows, without regard to a specific investment horizon. We are not forced to sell a business prematurely just because a fund's clock is running out. This long-term view lets us invest in strategic initiatives-like reshoring manufacturing or multi-year hedging strategies-that a short-term owner would avoid.

In our energy segment, for instance, over 70% of the operated oil and gas production is hedged through early 2028, a patient move that mitigates downside pricing risks and secures stable cash flow for years. Our goal is simply to build intrinsic value over time.

Acacia Research Corporation (ACTG) - Canvas Business Model: Customer Relationships

High-touch, direct relationship with portfolio company management

Acacia Research Corporation's primary customer relationship in its operating segments is a high-touch, direct partnership with the management teams of its acquired portfolio companies. This isn't a passive holding company model; it's an active, hands-on approach where Acacia leverages its deep operating executive network to drive material performance improvement. The goal is to maximize free cash flow generation and book value appreciation.

We see this in the three main operational verticals: Energy Operations (Benchmark Energy), Industrial Operations (Printronix), and Manufacturing Operations (Deflecto). For instance, with Deflecto, which was acquired in late 2024, the management team immediately focused on operational efficiencies and reshoring manufacturing to mitigate tariff pressures, a defintely hands-on relationship.

Institutional investor relations for capital raising

The relationship with institutional investors is crucial, as they represent the primary source of capital for Acacia's acquisition strategy. This is a dedicated, proactive relationship model focused on transparency and access. The high level of institutional support speaks to the success of this approach.

As of February 2025, institutional investors held approximately 87.85% of Acacia Research Corporation's shares. This is a massive concentration and requires constant, high-level engagement. The management team, including CEO MJ McNulty and CFO Michael Zambito, actively host 1x1 investor meetings, such as those scheduled for the Southwest IDEAS Investor Conference on November 20, 2025. This direct access is key to maintaining a strong capital base, which stood at $332.4 million in cash, equity securities, and loans receivable as of September 30, 2025.

Transactional engagement with sellers of assets and companies

The core of Acacia's business model is being a value-oriented strategic acquirer, so the relationship with potential sellers of businesses and assets is purely transactional yet requires deep industry relationships. This relationship is built on discretion, speed, and the ability to close complex deals.

The company's strategy is to continually build a pipeline of actionable mergers and acquisitions (M&A) opportunities, leveraging its significant capital base. This transactional relationship is a funnel; the company needs to be a preferred buyer to get the best deals, which is why they emphasize their ability to execute and their zero-corporate-debt balance sheet.

Formal, contractual relationships with IP licensees

In the Intellectual Property (IP) Operations segment, the customer relationship is formal and contractual, primarily centered on licensing agreements and legal settlements. This is a very different, often adversarial, relationship compared to the collaborative one with portfolio companies.

The relationship is defined by the terms of the license. The financial results from this segment demonstrate the scale of these formal agreements: the IP business generated $7.4 million in total paid-up revenue from multiple settlements and licenses in Q3 2025. For the nine months ended September 30, 2025, the IP segment generated a substantial $78 million in revenue, underscoring the importance of these legal and contractual relationships.

Customer Relationship Type	Primary Engagement Method	2025 Financial Metric (YTD Q3)
Portfolio Company Management	Direct, high-touch operational oversight	Drove Q3 2025 total revenue of $59.4 million (consolidated)
Institutional Investors	1x1 meetings, conference presentations	Institutional ownership at 87.85% (Feb 2025)
IP Licensees	Formal, contractual licensing and settlements	IP Revenue of $78 million (9 months ended Sep 30, 2025)

Investor communication via quarterly earnings and SEC filings

For the broader public and retail investor base, the relationship is a self-service, informational one, governed by regulatory requirements. This is where precision and consistency matter most.

The company maintains this relationship through the regular cadence of required disclosures.

• Quarterly Earnings Calls: Held to discuss results, such as the Q3 2025 results released on November 5, 2025.
• SEC Filings: Formal reports like the quarterly report on Form 10-Q, filed on November 6, 2025, for the period ending September 30, 2025.
• Book Value Per Share: A key metric communicated, which stood at $5.98 as of September 30, 2025.

This communication ensures all stakeholders have access to the same, verified information, which is non-negotiable for a publicly traded company.

Acacia Research Corporation (ACTG) - Canvas Business Model: Channels

The Channels element of Acacia Research Corporation's business model is a dual-track system: one channel focuses on capital deployment and deal sourcing, and the other focuses on intellectual property (IP) monetization. You need to see these channels as the conduits for both capital inflow (from the public market) and outflow (into acquisitions and licensing settlements).

This is not a retail operation; the channels are high-touch, institutional, and centered around sophisticated financial and legal deal-making. Simply put, their channels are their relationships and their public market presence.

Direct M&A outreach to target companies and sellers

Acacia's primary channel for its value-creation engine is direct, proprietary mergers and acquisitions (M&A) outreach. This isn't about bidding on widely shopped assets; it's about identifying 'underloved, undermanaged, and undervalued businesses' in the industrial, energy, and technology sectors.

The deep experience of the management team, like CEO Martin McNulty, Jr.'s background at Starboard Value and Starr Investment Holdings, is the real channel here. It's a relationship-driven process designed to bypass competitive auctions. They are focused on building an 'extensive pipeline of actionable M&A opportunities' as of late 2025.

Investment banking networks for deal flow sourcing

While direct outreach is preferred, the investment banking channel remains crucial for deal flow. Acacia leverages these networks to get early looks at opportunities that fit their value-oriented acquisition criteria. The hiring of Michael Zambito as Chief Financial Officer in June 2025, who spent over two decades at Ernst & Young's EY-Parthenon (a top strategy and transactions practice), defintely reinforces this institutional channel.

This channel is less about transaction execution and more about proprietary sourcing-getting the phone call before the teaser lands on everyone's desk.

Public market listings (NASDAQ: ACTG) for capital access

The NASDAQ listing (ACTG) is arguably their most critical channel, as it provides the capital base that fuels all other operations. This public market channel gives them a permanent capital vehicle, a key advantage over traditional private equity funds that have fixed investment horizons.

As of September 30, 2025, their total cash, cash equivalents, equity securities, and loans receivable stood at a substantial $332.4 million, or $3.45 per share. This strong balance sheet is the ultimate currency for their M&A channel. The market capitalization, which reflects the public's valuation of this capital base and their operating businesses, was approximately $354.01 million in November 2025.

Capital Channel Metric (Q3 2025)	Value/Amount	Channel Function
Total Cash & Securities (Sep 30, 2025)	$332.4 million	Fuel for M&A acquisitions and IP litigation costs.
Market Capitalization (Nov 2025)	$354.01 million	Public market valuation and access to future equity capital.
Corporate Debt (Jun 30, 2025)	$0.0	Indicates a clean balance sheet, enhancing M&A flexibility.

Dedicated internal teams for IP licensing and enforcement

The Intellectual Property Operations segment operates as a distinct channel with its own internal legal and licensing teams. This channel generates highly volatile, but significant, revenue through settlements and licensing agreements.

The lumpiness of this channel is clear in the 2025 results:

• Q1 2025 IP Revenue: $69.9 million
• Q2 2025 IP Revenue: $0.3 million
• Q3 2025 IP Revenue: $7.8 million

This IP channel is essentially a litigation and negotiation pipeline, converting patent assets into cash flow. It's a channel of legal enforcement, not traditional sales.

Investor relations portal for shareholder updates

The Investor Relations (IR) function serves as the key communication channel to the capital markets, ensuring transparency and maintaining the confidence of their shareholder base. This is crucial for keeping the cost of capital low.

In November 2025 alone, the management team was actively engaging investors, including a presentation at the Southwest IDEAS Investor Conference on November 20, 2025, with scheduled one-on-one meetings. Their IR portal hosts quarterly results, like the Q3 2025 earnings presentation, which reported a total revenue of $59.4 million. This channel is about managing the narrative and the valuation.

Acacia Research Corporation (ACTG) - Canvas Business Model: Customer Segments

Acacia Research Corporation's customer segments are dual-layered, reflecting its hybrid model as both a holding company (acquiring and operating businesses) and a patent monetization firm. Essentially, you're targeting two distinct groups: the companies and asset owners who need a buyer or capital, and the financial institutions looking for a non-traditional, value-oriented investment vehicle.

The core strategy is to acquire undervalued assets across the industrial, energy, and technology sectors, so the customers are sellers and partners in those spaces. Plus, you have the massive institutional capital base you need to keep satisfied. It's a two-sided business, defintely.

Undervalued public and private companies needing capital

This segment consists of operating businesses that are either underperforming, non-core to their current owners, or just need a capital injection and operational expertise to unlock hidden value. Acacia Research Corporation acts as a strategic, long-term buyer, not a quick-flip private equity fund.

The focus is on companies providing essential products and services, which is a smart, defensive play. Your portfolio today shows this clearly, with three main operating segments: Energy, Manufacturing, and Industrial. For example, the Manufacturing segment, primarily Deflecto, contributed $30.8 million in revenue in the third quarter of 2025, which is a clear indicator of the scale of the businesses you're targeting and operating.

• Target Sector Focus: Industrial, Energy (Benchmark Energy), and Technology (Printronix).
• Acquisition Criteria: Businesses with attractive underlying cash flows, regardless of a specific investment horizon.
• Near-Term Opportunity: Leveraging the strong balance sheet, which held $332.4 million in cash, equity securities, and loans receivable as of September 30, 2025, to pursue a growing pipeline of actionable merger and acquisition (M&A) opportunities.

Institutional investors seeking long-term, non-traditional returns

This is the capital base that funds the whole operation. These are large, sophisticated investors who see Acacia Research Corporation as a permanent capital vehicle (like a mini-BlackRock or Berkshire Hathaway) being managed by a disciplined, value-oriented team. They are looking for book value appreciation and a long-term compounder, not just quarterly earnings surprises.

The institutional backing is massive: institutional investors held an unchanged 87.85% of the company's shares in February 2025. This shows high conviction from funds that are comfortable with the holding company structure and the episodic nature of the Intellectual Property (IP) business. Key institutional shareholders include Starboard Value LP, BlackRock, Inc., and Vanguard Group Inc..

Here's a quick look at the financial metrics driving their interest:

Metric (as of Q3 2025)	Value	Significance
Book Value per Share	$5.98	A key metric for value-oriented investors, showing consistent underlying asset value.
YTD Free Cash Flow (9 months)	$55.9 million	Demonstrates the operating businesses' ability to generate capital for new acquisitions and debt paydown.
Institutional Ownership	87.85%	Indicates strong alignment and confidence from major financial institutions.

Patent holders looking to monetize intellectual property

This segment is the original core of Acacia Research Corporation, and it still provides significant, albeit episodic, cash flow. These customers are companies, universities, or individual inventors who have valuable patents but lack the expertise or resources to enforce them through licensing or litigation. They partner with Acacia Research Corporation to monetize their intellectual property (IP).

The IP business is volatile, but its potential is huge. Honestly, it's a big lever. For the year-to-date period through September 2025, the IP business generated $78 million in revenue. This figure was heavily skewed by a single, significant IP settlement in Q1 2025 that generated approximately $69.9 million in licensing and other revenue. Even in a quieter quarter like Q3 2025, the segment still generated $7.8 million in revenue.

Sellers of non-core corporate assets or divisions

This group includes large corporations looking to divest (sell off) a business unit that no longer fits their long-term strategy but is still a fundamentally sound operation. Acacia Research Corporation is a preferred buyer here because it offers certainty of close and operational expertise, often without the deep restructuring that a traditional private equity firm might impose.

The acquisition of Deflecto, which contributed $30.8 million in Q3 2025 revenue, is a perfect example of this. It was a business unit that a larger entity likely saw as non-core, but Acacia Research Corporation saw as a platform to scale within the manufacturing sector. These sellers value a buyer who can execute quickly and is committed to the long-term success of the divested business.

Financial professionals and analysts following the permanent capital space

While not a direct revenue-generating customer, this segment is crucial for market valuation and capital raising. Analysts, financial advisors, and portfolio managers need clear, consistent data and a well-articulated strategy to recommend the stock (ACTG) to their clients.

Acacia Research Corporation's management team, including the CEO and CFO, actively engages with this segment, as evidenced by their participation in the Southwest IDEAS Investor Conference in November 2025. Their goal is to translate the complex holding company model-which focuses on book value and cash flow generation-into a clear investment thesis, ultimately aiming to close the gap between the stock price (which was $3.56 per share on November 7, 2025) and the book value per share of $5.98.

Acacia Research Corporation (ACTG) - Canvas Business Model: Cost Structure

The cost structure for Acacia Research Corporation is fundamentally driven by its core strategy: acquiring and operating diversified businesses. This isn't a low-cost model; it's a value-driven one, where the major expenses are centered on the transaction process, corporate oversight, and the high-level talent required to manage a portfolio of companies. You're paying for expertise and deal flow, not just widgets.

For the nine months ended September 30, 2025, the total consolidated costs and expenses reached a significant $215.611 million, reflecting the scale of their operations across the Energy, Manufacturing, Industrial, and Intellectual Property segments. Here's the quick math on where your capital is deployed.

Acquisition costs and due diligence expenses

Because Acacia Research Corporation is an acquirer, transaction costs are a recurring, though episodic, expense. These costs are often embedded within the purchase price accounting or the General and Administrative (G&A) line item, making them hard to isolate. They cover everything from investment banker fees and legal review to operational due diligence (DD) on a target company like Deflecto, which they acquired in late 2024. The continual focus on M&A means there is defintely a steady burn rate for DD expenses, even for deals that don't close. The company's strong cash position of approximately $332.4 million as of September 30, 2025, is what gives them the flexibility to pursue these opportunities.

Compensation for executive and portfolio management teams

The management team's compensation is a key cost, directly tied to the value-creation model of sourcing and integrating acquisitions. This is where the cost structure reflects the 'analyst' nature of the business, where human capital is the core resource. For example, CEO Martin D. McNulty, Jr.'s total annual compensation is reported at approximately $1.27 million. This figure is below the market average for comparable US companies, which suggests a lean corporate structure at the parent level. Other key corporate roles also represent substantial fixed costs:

• Chief Administrative Officer Robert Rasamny: $890.27 thousand.
• General Counsel Jason Soncini: $707.73 thousand.

The compensation structure is designed to align with long-term shareholder value, often including a significant equity component to keep management focused on successful business integration and portfolio growth.

Legal fees for M&A and intellectual property litigation

Given the Intellectual Property (IP) segment, legal costs are a structural necessity, not just an occasional expense. While the IP segment generated $7.8 million in licensing and other revenue in the third quarter of 2025, the associated legal costs for litigation and patent defense are substantial. These costs fluctuate based on the timing of settlements and new lawsuits. Also, M&A activity requires heavy legal lifting for due diligence and closing, as seen by the General Counsel's compensation. For instance, a one-time legacy tax matter at Printronix resulted in a cost of $250,000, which was included in Other Expense, Net for the nine months ended September 30, 2025. That's a clear example of a non-core legal cost popping up.

General and administrative (G&A) overhead for corporate functions

G&A is the largest non-operating expense and covers the corporate overhead-the cost of being a public company and managing the portfolio. Total consolidated G&A expenses for the nine months ended September 30, 2025, were $48.816 million. In Q3 2025, the total consolidated G&A was $16.0 million, a figure heavily influenced by the acquired operating companies. The parent-level G&A is tightly controlled; on an adjusted basis, it decreased by $0.6 million year-over-year in Q3 2025, landing at $4.6 million for the quarter. This is a critical metric for a holding company-keep the corporate center lean.

The G&A is distributed across the segments:

• Manufacturing (Deflecto) G&A was $4.6 million in Q3 2025.
• Energy operations G&A was $1.2 million in Q3 2025.

Interest expense on any debt financing used for deals

Acacia Research Corporation maintains a strategic capital structure where the parent company has zero corporate debt as of September 30, 2025. However, the operating companies use non-recourse debt (debt tied only to the subsidiary's assets) to finance their operations and acquisitions. This is a smart way to ring-fence risk. The consolidated total indebtedness was $94.0 million as of September 30, 2025, down from $104.4 million in Q2 2025. This debt is split between the subsidiaries, with Benchmark at $58.5 million and Deflecto at $35.5 million. The interest expense for Q1 2025 was $2.451 million, which you should expect to see decrease as they continue to pay down debt, like the approximately $24 million paid down at Benchmark since its acquisition.

Here is a summary of the key cost components for the recent 2025 periods:

Cost Component	Q3 2025 Amount (in millions)	9 Months Ended 9/30/2025 Amount (in millions)
Total Consolidated Costs and Expenses	$65.872	$215.611
General and Administrative (G&A) Expenses	$16.0	$48.816
Parent-Level Adjusted G&A (Part of Total G&A)	$4.6	N/A
Interest Expense	N/A	N/A (Q1 2025 was $2.451)

Note: The total consolidated costs and expenses figure for Q3 2025 is $65.872 million, while the G&A is $16.0 million, meaning the bulk of the costs are in Cost of Revenue and other operating expenses from the acquired businesses.

Acacia Research Corporation (ACTG) - Canvas Business Model: Revenue Streams

Acacia Research Corporation's revenue model has shifted from a primary focus on Intellectual Property (IP) licensing to a diversified structure where operating businesses now provide the majority of the income. The direct takeaway is that while IP still delivers large, episodic windfalls, the core, stabilizing revenue comes from their acquired industrial, energy, and manufacturing segments, which generated a combined $51.7 million in Q3 2025 alone.

The company's strategy is fundamentally about acquiring undervalued businesses, improving their cash flow (operating income), and then realizing a significant gain when they eventually sell the optimized asset. This creates a dual revenue engine: steady operational cash flow plus large, irregular capital gains.

Operating income from acquired businesses and subsidiaries

This segment is the new backbone of Acacia Research Corporation's revenue, providing predictable, recurring cash flow. In the third quarter of 2025, the total revenue was $59.4 million, with the operated segments contributing the bulk of that, demonstrating the success of their acquisition and operational improvement strategy.

The revenue is broken down across three main operational areas, showing a clear diversification away from the volatile IP business:

• Manufacturing Operations (Deflecto): $30.8 million in Q3 2025, which was the largest single contributor.
• Energy Operations (Benchmark): $14.2 million in Q3 2025, with over 70% of operated oil and gas production hedged through early 2028 for price protection.
• Industrial Operations (Printronix): $6.7 million in Q3 2025.

This is the revenue stream you defintely want to watch for signs of operational health. Here's the quick math: the operating businesses contributed $51.7 million of the $59.4 million total revenue in Q3 2025, or about 87% of the total.

Licensing and royalty revenue from intellectual property

The Intellectual Property (IP) segment, operated by Acacia Research Group, LLC (ARG), is highly volatile but delivers the high-margin, large-scale settlements. It's an episodic revenue stream that can dramatically skew quarterly results.

The Q3 2025 revenue from Intellectual Property Operations was $7.8 million, showing a strong rebound from the previous quarter. To be fair, this is a massive drop from the Q1 2025 peak, which saw IP revenue hit $69.9 million, largely driven by a major settlement related to their WiFi-6 portfolio.

This segment's revenue is a classic example of a 'lumpy' income stream, where one large settlement can make up the majority of a year's revenue. The IP business assumes all operational expenses for patent licensing programs, sharing net licensing revenue with patent partners when applicable.

Gains from the sale of successful portfolio companies

While this is the ultimate goal of their value-oriented acquisition model-buying low, improving, and selling high-it is an infrequent, non-recurring revenue event. There was no major gain on the sale of a portfolio company reported in the third quarter of 2025.

However, the nine months ended September 30, 2025, did show a $3.512 million gain on the sale of equity securities, which is a component of their overall investment realization strategy. This is a crucial metric for long-term valuation, as it validates the core 'acquirer and operator' model.

Investment income from cash and short-term holdings

Acacia Research Corporation maintains a substantial liquidity position, which generates a steady flow of investment income. As of September 30, 2025, their total cash, cash equivalents, equity securities, and loans receivable amounted to $332.4 million.

In Q3 2025, the company reported an unrealized gain of $0.9 million related to changes in the fair value of equity securities. This is the mark-to-market income from their liquid investment portfolio.

Management fees from co-investment structures

Acacia Research Corporation acts as an investment manager for its own capital and, at times, for co-investment vehicles, though this is not a major line item in the core operating revenue breakdown. The company's focus is on acquiring and operating, not third-party asset management. The revenue breakdown for Q3 2025 focuses entirely on the operating segments (Manufacturing, Energy, Industrial) and Intellectual Property, with no separate line item for management fees.

Still, their model relies on leveraging their significant capital base and expertise, which is the foundation for any potential fee-generating co-investment structure. The company has $19.9 million in equity method investments as of September 30, 2025, which represents their stake in non-consolidated ventures that could potentially generate fees or carried interest (a share of the profits) down the line.

Revenue Stream Category	Q3 2025 Value	Nature of Revenue
Operating Income - Manufacturing (Deflecto)	$30.8 million	Recurring, Product Sales
Operating Income - Energy (Benchmark)	$14.2 million	Recurring, Commodity Sales (Hedged)
Operating Income - Industrial (Printronix)	$6.7 million	Recurring, Product Sales
Licensing & Royalty (Intellectual Property)	$7.8 million	Episodic, Patent Settlements/Licenses
Investment Income (Unrealized Gain on Securities)	$0.9 million	Irregular, Portfolio Valuation Changes
Gains from Sale of Portfolio Companies (9-Month Total)	$3.512 million	Episodic, Capital Gains
Total Revenue (Q3 2025)	$59.4 million